Most colon cancer cells express truncated versions of the tumour suppressor Adenomatous Polyposis Coli (APC). These molecules are selected during tumourigenesis for impaired beta-catenin degrading activity. In this study, we describe that truncated APC can still control the activity of beta-catenin in colon cancer cell lines via its first 20 amino acid repeat. First, we show that both endogenous and ectopically expressed truncated APC molecules can bind to beta-catenin. Second, reduction of the levels of truncated APC by RNA interference increases the activity of a beta-catenin-dependent reporter gene and stimulates the expression of the beta-catenin target gene AXIN2/conductin. This occurs without alterations of the amounts of cytosolic beta-catenin. Conversely, ectopic expression of truncated APC decreases beta-catenin-dependent transcription without affecting the intensity of immunofluorescence staining of beta-catenin in transfected cells. Third, we reveal that the APC level increases when cells reach the G1-S boundary during cell cycle progression. Simultaneously, the amount of beta-catenin bound to APC increases and the transcriptional activity of beta-catenin drops in an APC-dependent manner. Again, this occurs independently of the amounts of either total or phosphorylated cytosolic beta-catenin. Together, these results indicate that truncated APC controls the ability of beta-catenin to activate transcription. As we also show that the inhibition involves the first 20 amino acid repeat of APC, our data suggest that colon cancer cells retain a truncated APC molecule containing at least the first 20 amino acid repeat to modulate the transcriptional activity of beta-catenin in a cell cycle-dependent manner.